Investor's Corner
Renewable Energy Bounty via the Gigafactory Battery Plant?
Tesla’s CEO, Elon Musk discussing the footprint of the Gigafactory plant and its energy needs. (Photo Credit: Steve Jurvetson, @CreativeCommons licensing)
During last week’s earnings conference call, JB Straubel, CTO of Tesla Motors remarked that the Gigafactory battery plant is ahead of schedule.
“We’re a bit ahead of schedule in the Gigafactory than what we previously communicated. We felt it was important to go as fast as we possibly could and start some production operations in 2016,” says Straubel.
That’s impressive with such a large factory footprint and its many moving parts. “Basically, the Gigafactory pilot plant is as big as the next biggest or pretty close at least, I think, to any other lithium-ion factory out there,” Musk said during last week’s earnings conference call.
Part of the interest in the Gigafactory plant has been the promise of renewable energy to run the plant operations or a “net energy zero” battery plant. And according to a post on Engineering.com, this plant could actually have excess renewable energy for its daily operations in a relatively quick amount of time.
The article, entitled, Can Tesla Power Its Gigafactory with Renewables Alone?, states “the factory would consume 2,400 MWh per day. For comparison, that’s the equivalent electricity consumption of about 80,000 homes.”
So how does Tesla Motor’s Gigafactory plant produce enough energy to match 80,000 homes on per day basis? The post provides conservative calculations for the main ingredients of power at the lithium battery plant: Solar, Wind and Geothermal.
ALSO SEE: Solid State Battery Technology, a Tesla Gigafatory Killer?
The one caveat for me is the geothermal component. Nevada is a huge geothermal source, but whether it’s economical for Tesla Motors to drill and build a plant is another issue. However, the company could buy geothermal from a geothermal power producer in Nevada and attain its stated goal of a “net energy zero” factory. (For more on Nevada’s geothermal, click here)
The solar and wind production components seem very doable as the article points to 850 mWh of rooftop energy per day and 1,836 mWh per day from 85 wind turbines.
For the geothermal component, one plant could produce up to 240 mWh per day for a plant total of more than 2,900 mWh of renewable electricity each day, 20 percent more than it needs each day, according to Engineering.com.
To put the cherry on the sundae, the article points to Tesla’s well-known battery storage ambitions to smooth out its electricity power generation from these inconsistent power sources, wind and solar. Again, the number one aim of this plant is to produce enough batteries for 500,000 electric cars by 2020.
“Stationary storage is a vital element for going to sustainable power generation and we are currently assuming that somewhere around 30 percent or so of the Gigafactory output would be aimed at stationary storage, that’s a rough guess, says Musk. But, one way or another, stationary storage is going to be a really huge thing that needs to be done.”
So check out the article and its calculations, fascinating read on this truly unique lithium ion battery plant and its lofty ambitions.
Tesla received a price target boost from Morgan Stanley, according to a new note on Monday morning, but there is some considerable caution also being communicated over the next year or so.
Morgan Stanley analyst Andrew Percoco took over Tesla coverage for the firm from longtime bull Adam Jonas, who appears to be focusing on embodied AI stocks and no longer automotive.
Percoco took over and immediately adjusted the price target for Tesla from $410 to $425, and changed its rating on shares from ‘Overweight’ to ‘Equal Weight.’
Percoco said he believes Tesla is the leading company in terms of electric vehicles, manufacturing, renewable energy, and real-world AI, so it deserves a premium valuation. However, he admits the high expectations for the company could provide for a “choppy trading environment” for the next year.
He wrote:
“However, high expectations on the latter have brought the stock closer to fair valuation. While it is well understood that Tesla is more than an auto manufacturer, we expect a choppy trading environment for the TSLA shares over the next 12 months, as we see downside to estimates, while the catalysts for its non-auto businesses appear priced at current levels.”
Percoco also added that if market cap hurdles are achieved, Morgan Stanley would reduce its price target by 7 percent.
Perhaps the biggest change with Percoco taking over the analysis for Jonas is how he will determine the value of each individual project. For example, he believes Optimus is worth about $60 per share of equity value.
He went on to describe the potential value of Full Self-Driving, highlighting its importance to the Tesla valuation:
“Full Self Driving (FSD) is the crown jewel of Tesla’s auto business; we believe that its leading-edge personal autonomous driving offering is a real game changer, and will remain a significant competitive advantage over its EV and non-EV peers. As Tesla continues to improve its platform with increased levels of autonomy (i.e., hands-off, eyes-off), it will revolutionize the personal driving experience. It remains to be seen if others will be able to keep pace.”
Additionally, Percoco outlined both bear and bull cases for the stock. He believes $860 per share, “which could be in play in the next 12 months if Tesla manages through the EV-downturn,” while also scaling Robotaxi, executing on unsupervised FSD, and scaling Optimus, is in play for the bull case.
Will Tesla thrive without the EV tax credit? Five reasons why they might
Meanwhile, the bear case is placed at $145 per share, and “assumes greater competition and margin pressure across all business lines, embedding zero value for humanoids, slowing the growth curve for Tesla’s robotaxi fleet to reflect regulatory challenges in scaling a vision-only perception stack, and lowering market share and margin profile for the autos and energy businesses.”
Currently, Tesla shares are trading at around $441.
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
Tesla bear Michael Burry ditches bet against $TSLA, says ‘media inflated’ the situation
For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
Tesla announces major milestone at Gigafactory Shanghai
Tesla gamifies Supercharging with new ‘Charging Passport’
